In the profession of meteorology, this is known as weather
modeling—shorthand for a statistical analysis of current conditions that helps forecasters simulate and predict future changes.

“Weather forecasting has made enormous strides in the last few
decades,” said Jason Samenow, chief meteorologist and weather
editor for The Washington Post. “A three-day forecast today is as
accurate as a one-day forecast in the 1980s. Computer models have
become vastly more powerful and sophisticated, and today’s weather
forecasters have an amazing arsenal of tools for making predictions.”
To be clear, that’s not because the meteorologists of 30 years ago
were bad at their jobs, Samenow points out. It’s simply that contemporary forecasters have better access to information and technology.

The technology is perhaps the most important component. Faster
computers allow models to be run more often and use more data
than ever before, and thus offer greater precision. Meteorologists
in the past may have seen the same patterns and correlations, but
it’s only possible to process that information now—and thus better
predict short-term weather trends.

U.S. Faces Technological Deficit

But while better technology and information have been boons
to meteorologists over the past few decades, it’s hardly smooth
sailing for the profession in 2017.

Experts in the profession agree that, unfortunately, U.S. weather
modeling is well behind that of Europe or Japan in its accuracy—
because our technology is inferior.

For instance, in 2012 the American Global Forecasting System
predicted Hurricane Sandy would dissipate in the Atlantic with
minimal disruption to the United States, while the European
Center for Medium-Range Weather Forecast warned that the
storm would turn sharply to the west and strike populated areas
of the East Coast.

Tragically, the latter scenario proved correct as 233 people died in
the wake of Sandy; damage has been estimated at around $75 billion.[ 2]

According to many experts, a big reason for the variance was an
inferior modeling system for the “cumulus parameterization”[ 3]—a
fancy term for estimating the physical properties of clouds as water
evaporates and condenses.

Once again, it’s not a basic understanding of weather that failed
U.S. weather meteorologists. It was the fact that the models and
the data weren’t as precise here as they were overseas.

The irony is that weather modeling and forecasting technology
continues to improve every year, and the United States has plenty

JIM MACGINNITIE is an
actuary and the senior casualty fellow
at the American Academy of Actuaries.

With over 50 years of experience, he’s a
respected voice on many issues within
the profession, including the risks
posed by climate change.

Most recently, MacGinnitie was
instrumental in launching the Actuaries
Climate Index (ACI)—an objective indicator
of the frequency of extreme weather and
the extent of sea level change.

Here’s a lightly edited transcript of a
recent conversation with MacGinnitie
about the index, what actuaries should
know about climate change, and how it
will a;ect their work in the future.

What is the Actuaries Climate Index,
and what does it measure?

The Actuaries Climate Index
is composed of six components,
measuring high and low temperatures,
drought or excessive rainfall, high
winds, and sea level. The focus is on
extreme measurements, as compared
to a 30-year reference period from

1961 to 1990. It does this for both
Canada and the continental United
States, broken into 12 regions. The
index is compiled quarterly.

The ACI launched at the end of

2016. Were there discussions or
actions before then among actuaries
regarding the topic of climate
change?

Yes. Climate has been on theprogram at several actuarial meetingsover the past decade or more. Theimpact on hurricane frequency andseverity has been one focus of thatdiscussion. Crop yields has beenanother. More sophisticated modelsof these and other weather-relatedphenomena have been developed.

There have also been discussions of the
relationship of climate and weather,
which are not the same thing. That
led to a discussion of developing an
index that focuses on climate extremes,
which are what generate insured losses.

And from that came the very substantial
e;orts by the several actuarial
associations to create the Actuaries
Climate Index and the Actuaries Climate
Risk Index [(ACRI), a related index that
will correlate extreme weather events
with economic losses].